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Bain & Co Infographic: Carbon Credits and Banks (recall the auctions from Banco do Brasil?)

According to an August 9 infographic from Bain & Company, voluntary carbon markets (VCM) can represent new revenue streams for banks.


Reasons for that:

  1. growing number of governments promoting carbon credits as a way for companies to meet net-zero goals

  2. over 50% of the largest companies globally have net-zero targets for 2050, and several missed most intermediary deadlines so far

  3. expectation that VCM multiplies by at least 4 times in the coming years

  4. already existing banking structure, "social license" to operate and regulatory oversight


Carbon credits would fit perfectly into the banking suite of products. For example:

  • Project identification, quality

  • Financing, involving all stakeholders

  • Implementation, documentation and project monitoring (and compliance)

  • Due-diligence, verifications and interactions with the official registries

  • Trading and financial instruments

  • Portfolio consulting and advisory


Click at the image below - indicating (1) Carbon Credit Purchase, (2) Project Financing and (3) Risk Management Services with the best correlation "ability to win x markets attarctiveness" - to navigate this great Bain & Co. infographic. And see the four steps suggested for banks to take up into the carbon credit markets.


About (1) Carbon Credit Purchase by banks, recall the case of Banco do Brasil, for already matching carbon credits with repossessed rural properties. The bank is accepting auctions of these types of properties to be settled with high quality and transparently registered carbon credits.


Note: Compared to the original post date 10 June 2023, if you navigate now at the auctioners portal, you will see new properties and edital dated 26 July 2023, now incluiding Annex 12 with reference carbon prices for REED+ and ARR. According to item 3 of Annex 8 of the edital, "Banco do Brasil will act as the holder of the carbon credits acquired for the purpose of offsetting GHG emissions, whether own or from customers".


Bain & Co also reported on a real banking case: "We helped BankCo* seize the VCM opportunity, defining the market landscape and delivering a blueprint for its participation. We identified nearly 20 ways for BankCo to engage, prioritizing near-term actions it could implement immediately to create positive impact and significant financial returns." (*real name replaced confidentiality reasons).


Speed and innovative drive are key towards this new competitive advantage.





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 CARBON CREDIT MARKETS

“Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.”

“I am among those who think that science has great beauty”

Madame Marie Curie (1867 - 1934) Chemist & physicist. French, born Polish.

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